Fraud Investigation on at Blackjewel LLC Wyoming Coal Mine

Blackjewel Coal Company has come under the federal government scanner for violating the False Claims Act.

The coal company has to pay $50 million to the federal government, according to document filings. The company has been facing investigation for potential violations of the False Claims Act, even before Blackjewel filed for bankruptcy.

Coal operator Blackjewel filed for bankruptcy on July 1. Its operations were shut down when the company was unable to find a lender to pay for its operating costs, while bankruptcy proceedings were on.

The federal bankruptcy court of West Virginia has been asked to delay Blackjewel’s debt discharge, so that investigation can continue on the False Claims Act. If the company liquidates, the government cannot recover its debts back from Blackjewel.

Blackjewel LLC has been issued a subpoena in connection with the investigation, says U.S. attorney Fred Westfall.

A law professor from Cornell University, Joshua Macey, says that bankruptcy should not be used by any company to defraud the government and get out of government debts.

Blackjewel has to repay $50 million to the fed, but could not get the funding from its key creditor, forcing the company to close down its mining operations. The mining operations at Belle Ayr mine and Eagle Butte mine in Wyoming are also shut down.

Blackjewel has about 600 workers waiting for the new management to bring the mine back to full operation.

The two Wyoming facilities had been approved sale to Eagle Speciality Materials but without the debt obligations of Blackjewel.

Contura Energy Coal Company has agreed to pay $90 million to take over the Wyoming mines. Blackjewel will be paid $16.2 million. Though the purchase of the mine will not be affected while the investigation continues, the fed will not be able recover the debt owed to it, says Macey.

Investigations are on under the False Claims Act so that corporations do not defraud the government.

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